PRETORIA - February 7 2001 - Two issues have been raised in the press in relation to the Bankorp/ABSA matter:
SARS received the letter of alleged tax evasion from the informer in March 1997. SARS, in fact, issued the ruling on the tax treatment of the scheme in 1992. The information about the scheme was known to SARS well before the informer provided his information.
The terms and conditions governing SARS reward system requires that specific information must be provided of which SARS is not aware, and is not likely to become aware of in the ordinary course of its business. Any reward that may become payable will also only be paid in respect of taxes actually collected as a direct result of the information provided.
From time to time, application is made to the Commissioner to provide direction and advice in matters and arrangements that contain unique tax implications. The most notable of these, in recent years, were the unbundling arrangements effected by certain major South African corporations. All aspects of any arrangement are examined in depth in conjunction with the affected parties and a departmental ruling is issued in terms of all current legislation, income-tax case law and departmental practices prevailing at the time which protect the interests of the fiscus.
In 1992, a request for such a ruling was received from Bankorp Ltd in respect of a highly confidential agreement entered into with the South African Reserve Bank, which has become known as the LIFEBOAT scheme. After a thorough look at the proposed arrangement, SARS was satisfied with the correctness of the proposed tax treatment of the scheme in terms of all applicable income tax statutes and prevailing departmental practices. In June 1992, the Commissioner therefore provided BANKORP/ABSA with a ruling as to the tax treatment of the lifeboat.
In the ordinary course of its business, the South African Revenue Service examined the subsequent activities of Bankorp Ltd and those of Absa Ltd to ascertain whether the conditions of the scheme as agreed upon in 1992 had been adhered to.
The conclusions drawn from the examination of these activities were that there had been no loss to the fiscus.
Taking into account the above, it is quite clear that the information about the scheme was already known to SARS at the time. Furthermore the information in itself did not meet the requirements as set out above. Therefor SARS concluded that the informer is not entitled to any reward.
ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE